Sen Corker: no exemptions in new watchdog bill

By IBT Staff Reporter On 03/10/10 AT 3:48 PM

An influential Republican in U.S. Senate talks on financial regulatory reform said on Wednesday there are no special exemptions for particular institutions in a proposed new government financial watchdog agency.

Senator Bob Corker, amid reports that he has pressed in negotiations for special treatment in legislation for payday lenders, said: There are no carve-outs for anybody.

U.S. businesses including financial services firms and payday lenders have been lobbying the Senate to water down a White House plan to create an agency to regulate consumer financial products, such as mortgages, credit cards and payday loans, which are short-term loans made against the borrower's next pay check.

Corker, a first-term Republican, stressed at a conference that he was not aware of any carve-outs and suggested that reports that said otherwise were incorrect.

Corker is working closely with Senate Banking Committee Chairman Christopher Dodd, a Democrat, on crafting a bipartisan financial regulation bill, along with Republican Senator Richard Shelby, the committee's top Republican.

The White House and top Democrats favor an independent Consumer Financial Protection Agency with authority to write and enforce rules. Republicans are opposed to giving government sweeping new powers to regulate consumer financial products.

Corker reiterated that consumer protection should not be allowed to trump supervision of bank safety and soundness -- a position Republicans have held consistently through months of debate.

Democratic Senator Mark Warner said banking committee members were on the verge of getting a bipartisan approach that appropriately enhances consumer protection.

The banking committee is considering placing consumer protection authority with the U.S. Federal Reserve, even though the central bank has been criticized for lax regulation.

I agree that the Fed did a terrible job of protecting consumers, Corker said at a National Journal event in Washington, but added that the government cannot have multiple regulators dealing with financial institutions and giving them mixed signals.

Corker, however, said there would be a way for bank regulators to ensure that consumer rules do not destabilize the safety and soundness of financial institutions.

Aside from new rules to protect consumers, the Senate panel is working on a bill to regulate the $450 trillion over-the-counter derivatives market and ensure that a federal entity has a way to look at risk throughout the financial system.

Corker and Warner have been working on legislation to ensure that no financial firm is too big to fail after the U.S. government used billions of dollars in taxpayer funds to rescue companies such as insurer AIG and Bank of America

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At the same conference, Warner said that bankruptcy would be the preferred option for a troubled financial firm.

We will be reiterating that no rational management team will want to think about resolution, he said.